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October 3, 1951

GANNOE et al.

The opinion of the court was delivered by: MARSH

This suit is brought under provisions of Part II of the Interstate Commerce Act, *fn1" and particularly Section 222(b) *fn2" . The Interstate Commerce Commission asserts that the defendant, Clarence E. Gannoe, is a common or contract carrier by motor vehicle as these terms are defined in the Act; and, since he does not have a certificate or a permit issued by the Commission authorizing such operations, the Commission requests that he should be enjoined from transporting property in interstate commerce for compensation.

After final hearing, the court is of the opinion that the request should be granted and that the injunction should issue.

 From June, 1949, to September 30, 1949, the defendant, Gannoe, for compensation, transported property owned by Cozier Container Corporation (hereinafter referred to as Cozier), in interstate commerce, in vehicles owned by the defendant, pursuant to the terms of a 'Lease Agreement' then in effect between the parties.

 Gannoe resided in Erie, Pennsylvania. Cozier operated a box manufacturing plant in Jefferson, Ohio. Although it owned trucks of its own, the company required additional transportation facilities, as it was inconvenient to engage common carriers to transport its product to customers in Cleveland, Ohio, Erie, Pennsylvania, and Jamestown, New York. The 'Lease Agreement,' which was dated September 14, 1948, purported to lease a tractor and trailer truck to Cozier 'with no other obligation of any kind' except to pay as rent certain sums per ton transported to the above-mentioned cities. The agreement states: 'The lessor agrees that he will deliver and transport the products of the lessee * * * at the direction of the lessee * * *.' It provided for renewable terms of three months each unless cancelled by a thirty day written notice from either party.

 It does not seem to be seriously disputed that this arrangement was a violation of the Interstate Commerce Act, Section 209(a), *fn3" and when objections were made by an agent of the Interstate Commerce Commission, the defendant sought counsel who prepared a new agreement called an 'Equipment Lease,' which was executed by defendant and accepted by Cozier on October 1, 1949. This agreement was in effect between the parties up to and including the time of the trial on April 2, 1951. It provides as follows:

 'Equipment Lease

 'The undersigned hereby agrees to furnish Cozier Container Corporation with the motor vehicle equipment identified below or with such other motor vehicle equipment of at least the same size and capacity as may be substituted therefore (sic), from the date of this agreement until said agreement is terminated by the delivery of written notice by either party to the other at least three (3) days prior to such proposed termination and cancellation. The undersigned agrees that he will assume full and complete responsibility for the maintenance and repair of said motor vehicle equipment and will maintain it in good operating condition at all times, including compliance with all safety and other applicable requirements of the Interstate Commerce Commission and of each state entered.

 'The undersigned agrees that he will indemnify and save harmless Cozier Container Corporation from any and all claims for damages caused by or arising out of any defect in said equipment or any failure to comply with any of the foregoing requirements and further agrees that he will at all times maintain in full force and effect public liability and property damage insurance in an insurance company and in limits satisfactory to said Cozier Container Corporation and that he will cause said Corporation to be named as an additional interest in all of such policies and that the insurance companies will furnish Cozier Container Corporation notice of any material change or condition ten (10) days prior to the effective date, if any such change.

 'Cozier Container Corporation will pay to the undersigned as full consideration for the use, maintenance, and cost of operation of said equipment the respective amounts set forth on Schedule A, attached hereto and made a part hereof. It is understood and agreed that the drivers engaged in the operation of such equipment shall be employees of Cozier Container Corporation and shall be subject to its direction and control. The undersigned further agrees that the wages paid to said drivers plus any payroll taxes or workmen's compensation insurance paid thereon may be deducted by Cozier Container Corporation from the amounts due to him hereunder as computed in accordance with the attached Schedule A. The undersigned further authorizes Cozier Container Corporation to deduct from any sum due him hereunder any expenditure made by it or on its behalf for the maintenance, repair, or servicing of said equipment and any and all damages to any property owned by said Corporation, which may be caused by or result from any defect in said equipment.


 'Cozier Container Corporation

 'By (s) E. D. Elderkin '(s) C. E. Gannoe C. E. Gannoe Cleveland, Ohio October 1, 1949' "FREIGHT RATES to Apply on Attached Contract From Jefferson, Ohio Destination Commodity Rates Signatures ////////--- ///////-- ///-- ////////-- Cleveland, Ohio Watkins and Corrugated Boxes $ 29.00 H. R. Trees and C. E. Gannoe Erie, Penna. Watkins and Corrugated Boxes 29.00 H. R. Trees and C. E. Gannoe Erie, Penna. Skid Boards 29.00 H. R. Trees and C. E. Gannoe Corry, Penna. Watkins Boxes 30.00 H. R. Trees and C. E. Gannoe Jamestown, N.Y. Watkins Boxes 36.00 H. R. Trees and C. E. Gannoe 1 Dodge 3-ton Tractor 1 Dodge 2 1/2-ton Tractor 32-ft. Closed Freuhauf Trailers"


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